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CFA: Criminal Finances Act 2017

The Criminal Finances Act 2017 (CFA) is a United Kingdom law enacted to strengthen the country’s ability to detect, prevent, and combat financial crimes such as money laundering, terrorist financing, tax evasion, and the concealment of criminal property.

The Act builds upon the Proceeds of Crime Act 2002 (POCA) and introduces new powers and corporate offences to enhance transparency and accountability in financial and business operations.

The CFA was introduced in response to growing concerns over the misuse of UK companies and financial systems for illicit purposes, including the concealment of proceeds derived from corruption and international money laundering.

It is a key component of the UK’s broader strategy to align with global anti-money laundering (AML) and counter-terrorist financing (CTF) standards.

Purpose & Scope

The CFA’s primary objective is to improve the UK’s legal framework for tracing and recovering the proceeds of crime, while also encouraging organizations to implement stronger compliance mechanisms.

It applies to individuals, corporations, and professional service providers, particularly those in sectors vulnerable to financial crime, such as banking, legal, accounting, and real estate.

The Act covers several major areas of reform, including:

  • Corporate liability for failure to prevent tax evasion.
  • Enhanced powers to seize, freeze, and recover criminal assets.
  • Greater information-sharing between public and private sector entities.
  • Expansion of investigative tools to trace illicit wealth.

Key Provisions of the CFA 2017

  • Unexplained Wealth Orders (UWOs): Introduced under the CFA, UWOs empower enforcement agencies, such as the National Crime Agency (NCA), to compel individuals to explain the origin of assets that appear disproportionate to their known income. If the individual fails to provide a satisfactory explanation, the assets may be presumed to be the proceeds of crime and subject to civil recovery. UWOs are particularly targeted at politically exposed persons (PEPs) and individuals suspected of laundering money through UK property or business holdings.

  • Information Sharing and the Joint Money Laundering Intelligence Taskforce (JMLIT): The Act formalizes and expands the mechanisms that allow regulated entities (e.g., banks and financial institutions) to share information with each other and with law enforcement agencies to detect and prevent money laundering and terrorist financing. These provisions encourage collaboration between the private sector and government bodies, making it easier to identify suspicious financial patterns and networks.

  • Seizure and Forfeiture Powers: The CFA broadens law enforcement’s authority to seize and forfeit proceeds of crime from bank accounts and certain personal property, even in cases where no criminal conviction has been secured. This “civil recovery” approach is designed to disrupt criminal enterprises and recover illicit funds more efficiently.

  • Corporate Offences for Failure to Prevent Tax Evasion: One of the most significant aspects of the CFA is the creation of two new corporate offences related to tax evasion:

    • Failure to prevent the facilitation of UK tax evasion.
    • Failure to prevent the facilitation of foreign tax evasion.

Under these provisions, a company can be held criminally liable if an employee, agent, or associated person assists another individual in committing tax evasion, even if senior management was unaware. The only defense available to a company is to demonstrate that it had “reasonable prevention procedures” in place to deter such conduct.

  • Extension of Suspicious Activity Report (SAR) Handling Periods: The Act extends the statutory timeframes for law enforcement to investigate transactions reported via SARs before they are cleared or blocked. This allows agencies additional time to assess and act upon complex financial intelligence.

Relevance to AML Compliance

The CFA has direct implications for AML programs within financial institutions and businesses operating in the UK.

By emphasizing due diligence, internal controls, and corporate accountability, the Act aligns closely with the UK Money Laundering Regulations and international AML frameworks such as those recommended by the Financial Action Task Force (FATF).

Key compliance expectations include:

  • Conducting enhanced due diligence on high-risk customers and politically exposed persons.
  • Implementing internal policies to prevent the facilitation of tax evasion.
  • Training employees and agents to recognize and report suspicious financial activities.
  • Maintaining accurate records of beneficial ownership to promote transparency.

Organizations that fail to comply face severe penalties, including criminal prosecution, unlimited fines, and reputational damage.

Practical Implications for Businesses

Businesses across financial and non-financial sectors must adopt proactive compliance measures to mitigate the risks posed under the CFA. Key steps include:

  • Risk Assessments: Evaluating exposure to tax evasion and money laundering risks.
  • Prevention Procedures: Establishing documented and auditable controls to detect and prevent financial crimes.
  • Third-Party Due Diligence: Monitoring agents, intermediaries, and business partners for red flags.
  • Governance Oversight: Ensuring board-level accountability for AML and financial crime compliance.
  • Ongoing Monitoring: Reviewing transactions and relationships for anomalies or suspicious activity.

Impact on Law Enforcement and the Private Sector

The CFA has significantly strengthened the ability of UK authorities to recover illicit wealth and dismantle criminal financial structures.

The introduction of UWOs and enhanced asset recovery tools has led to high-profile investigations targeting corrupt officials, organized crime figures, and money launderers who use the UK financial system to conceal assets.

The Act has also encouraged greater data-sharing between financial institutions and regulators, creating a more unified approach to financial crime prevention. However, it also places increased compliance burdens on legitimate businesses, requiring continuous adaptation to evolving regulatory expectations.

Examples of Enforcement

  • Unexplained Wealth Orders against Foreign Officials: Several cases have involved the use of UWOs to investigate the acquisition of multi-million-pound London properties linked to individuals suspected of corruption or money laundering abroad.

  • Corporate Tax Evasion Facilitation Cases: Companies have faced scrutiny under the “failure to prevent” provisions for inadequate internal controls that allowed employees or intermediaries to assist clients in concealing taxable income.

Challenges & Criticism

While the CFA 2017 is widely regarded as a milestone in the UK’s fight against financial crime, it has faced challenges, including:

  • The complexity of implementing effective prevention procedures across large organizations.
  • Concerns about the potential misuse of UWOs and the burden of proof they place on individuals.
  • Limited resources and enforcement capacity for consistent nationwide application.

Conclusion

The Criminal Finances Act 2017 marks a pivotal step in strengthening the UK’s anti-financial crime regime.

By targeting both individual offenders and corporate enablers, it reinforces the principle that businesses have a legal and ethical duty to prevent the facilitation of illicit financial activity.

Compliance with the CFA not only mitigates legal and reputational risk but also supports broader efforts to protect the integrity of the global financial system.

Related Terms

  • Proceeds of Crime Act (POCA)
  • Unexplained Wealth Order
  • Tax Evasion
  • Financial Crime
  • Suspicious Activity Report
  • Money Laundering Regulations

References

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